Report urges Australia to 'pivot' and diversify trade and investment

THE Joint Standing Committee on Trade and Investment Growth has released its new report Pivot: Diversifying Australia’s Trade and Investment Profile, which examined how the Australian Government could support businesses to diversify Australia's trade markets and sources of foreign investment.

Committee chair, George Christensen said "now more than ever it was important that Australia takes the opportunity to pivot towards new export markets and trade and investment opportunities, to support sustainable economic growth over the long term".

"The committee has recommended that the government develop a plan for trade diversification and examine options to expand domestic investment and production. These reforms will protect Australia from the risks of having too many eggs in one basket," Mr Christensen said. 

"Diversifying the range of products and services that Australia exports, including through greater support for future-focused and innovative industries, will further ensure Australia is not overexposed to trade disruptions or shocks in any one export market."

Mr Christensen said the committee’s recommendations were also aimed at protecting Australia’s national interest and national security, particularly in sensitive and critical sectors.

The committee made 21 recommendations, which include:

  • Developing and releasing a plan for trade diversification, and continuing to create trade opportunities including in India, Vietnam and through the Regional Comprehensive Economic Partnership agreement;
  • Increasing industry awareness of national security and national interest risks related to trade and investment, particularly for sensitive and critical sectors;
  • Investigating new options for increasing domestic funding for universities, requiring universities to publicly disclose the receipt of funding from foreign state linked bodies or individuals, and where the veto powers in Australia’s Foreign Relations (State and Territory Arrangements) Act 2020 allow, considering restrictions to foreign state-linked funding to Australian universities where the funding is not considered to be in the national interest;
  • Increasing Australia’s sovereign manufacturing capacity and ensuring that Australia has adequate supplies of key resources;
  • Greater support for the ‘industries of tomorrow’;
  • A clear and consistent definition of the national interest for foreign investment;
  • Reporting on whether the leasing of the Port of Darwin to a foreign company will be subject to the Australia’s Foreign Relations (State and Territory Arrangements) Act 2020; and
  • Options for greater domestic investment, including through superannuation funds and consideration of a national development bank.

The full report is on the committee’s webpage.


ABF launches trials in blockchain trade security with Singapore

THE Australian Border Force (ABF) is developing solutions to make cross border trade simpler and paperless for Australian businesses, in line with the bilateral Australia-Singapore Digital Economy Agreement.

A trial was launched on November 23 with Singapore Customs and Singapore Infocomm Media Development Authority (IMDA) to test digital verification systems. These systems are the first to be developed using blockchain technology by experts from Australia and Singapore at the United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT) for inter-government document exchange.

ABF commissioner Michael Outram said the ABF looked forward to close collaboration with international partner agencies on mutual border modernisation programs. 

“The ABF welcomes the opportunity to collaborate further with Singapore to improve cross-border trade between our countries," he said. "In addition to our efforts internationally, this initiative will incorporate paperless trading and secure, digital exchange of trade information as part of the future architecture and design of an Australian Trade Single Window”.

The trial will test digital verification platforms across both the ABF-developed Intergovernmental Ledger (IGL) and IMDA’s TradeTrust for electronic trade documents. Businesses and regulators will give feedback on their experience verifying Certificates of Origin with the two systems – with the aim of reducing administration costs and increasing trade efficiency.

The Australian Chamber of Commerce and Industry, Australian Industry Group, as well as financial institutions in Singapore, including ANZ, will take part in the trial.

The trial supports the Australian Government’s recently announced Simplified Trade Agenda, which will reform and digitise trade compliance processes. The Department of Agriculture, Water and the Environment is also collaborating on complimentary digital initiatives with Singapore regulators to progress paperless trading for phytosanitary and sanitary certificates for food and agricultural trade.

The ABF will feed lessons learned from the trial into the Supply Chain Working Group’s Discovery Report under the National Blockchain Roadmap led by Department of Industry, Science, Energy and Resources.


Resources report: sector is keeping Queensland economy 'afloat'

  • Trade

THE RESOURCES industry has played a critical role in keeping Queenslanders working and earning through COVID-19 and is central to the state’s economic recovery, according to the Queensland Resources Council’s (QRC) latest State of the Sector report.

QRC chief executive Ian Macfarlane said results from its quarterly report -- which gathered feedback from business leaders in mining, energy, minerals processing, contracting, exploration, electricity generation and oil and gas extraction between July and August this year -- proved resources had been a “life raft” for the state in terms of jobs and exports.

“More than 80 percent -- or $63 billion -- of Queensland’s exports over the past 12 months came directly from our resources sector, which is $12,000 of export sales for every man, woman and child in Queensland,” Mr Macfarlane said. 

“This is a result more than 370,000 Queensland resource sector workers can be very proud of, and we hope Queenslanders are proud of too.

“I’ll be in Townsville today and Mackay and Rockhampton this week to promote the importance of the resources sector to Queensland’s economic recovery and stability post-COVID, because it’s not something that should be taken for granted by government or the community,” he said.

“Just like any industry, resources is impacted by fluctuating commodity prices, economic conditions, changes in government regulations and shifts in community expectations, so we need to keep communicating what our industry has to offer so people can understand what a powerhouse it is for our state.

“Make no mistake, without the resources industry continuing to perform, produce and employ, Queensland is in a precarious economic position.”

Mr Macfarlane said the State of the Sector report found burdensome State Government red tape was a major headwind facing the sector.

“There are projects that have been waiting more than a decade for approval, which is frankly ridiculous and a job killer,” Mr Macfarlane said.

“The resources industry needs a more streamlined assessment process for new projects and expansion of existing projects, coupled with a streamlined, best practice regulatory framework to operate within. Business as usual post-COVID is not going to cut it."

Mr Macfarlane said despite resources being recognised as an essential activity by all levels of government, the State of the Sector survey found companies have become increasingly concerned about State Government uncertainty and regulation, with confidence falling a concerning seven points compared to the previous quarter.

“If the resources sector is to keep earning and employing, we cannot have unreasonable barriers to new investment and jobs put in place by the State Government with little or no consultation or warning,” Mr Macfarlane said.

“Constant increases in taxes and charges, and changes to rules and regulations, frighten away potential long-term investors in our sector and must stop.

“The more projects we can bring to production, the more jobs and more dollars there will be for Queenslanders and for Queensland.

“To make this happen we need regulatory stability and certainty in Queensland, starting with a 10-year hold on royalties and charges to give ourselves a fighting chance of making it out the other side of COVID.”


Australia's fuel security plan 'misses the boat' on shipping say unions

  • Trade

THE $211 million commitment from the Federal Government to fund increased domestic fuel storage and support Australian oil refineries is a welcome step to improving fuel security, according to the Maritime Union of Australia (MUA), but the plan still fails to resolve issues facing the transport of liquid fuels to Australia and around the coast.

The plan seeks to deliver an additional 780megalitres of onshore diesel storage, along with minimum stockholding obligation for key transport fuels, however the policy will still see Australia fall well short of the International Energy Agency’s 90-day fuel stockholding obligation.

The MUA said the announcement also failed to address the nation’s complete reliance on foreign owned, operated and crewed tankers to transport oil and petroleum products to Australia and around the coast.

The union said the situation had greatly deteriorated in recent decades, with more than 90 percent of Australia’s liquid fuel needs now arriving via foreign owned and operated tankers. While 12 Australian-crewed tankers operated in the year 2000, there are no longer any in service.

MUA national secretary and International Transport Workers’ Federation president Paddy Crumlin urged the Federal Government to address the nation’s complete reliance on foreign owned, operated and crewed tankers as part of efforts to address Australia’s chronic fuel security issues.

“The Morrison Government’s initial steps to enhance domestic fuel refining and storage capacity are a good start, but genuine energy security requires action on how fuel is transported to Australia and around the coast,” Mr Crumlin said. 

“The COVID-19 heath crisis has highlighted the vulnerability of Australia’s supply chains and demonstrated how quickly a pandemic, military conflict, natural disaster, or economic shock could impact the supply of essential goods.

“Clear gaps in Australia’s sovereign self-sufficiency have been exposed, placing a clear obligation on the Federal Government to close these gaps and reinforce the cabotage system that governs shipping around our coast, along with biosecurity, immigration, and related border controls.

“The COVID-19 crisis reinforced how absolutely essential shipping is, not only to fuel security but also to maintaining other domestic supply chains that provide essential deliveries," Mr Crumlin said.

“Australia’s complete reliance on foreign owned and operated tankers has left the nation extremely vulnerable, with no guarantee these vessels would continue to supply Australia during a major crisis.

“While recent shortages of household items were inconvenient, a crisis that cut fuel supplies would force the entire economy to grind to a halt.”

The MUA met with Energy Minister Angus Taylor in July to outline this weakness in Australia’s fuel security.

“The Federal Government clearly understands that improving fuel security requires the strengthening of domestic refining capacity and a substantial increase to domestic storage, but the issue of how fuel products are transported to our island nation remains unresolved,” Mr Crumlin said. 

“If the Federal Government is serious about examining industry solutions to address Australia’s fuel security, then it needs to look at the creation of a strategic fleet of Australian owned, flagged, or crewed tankers capable of maintaining supplies of oil and refined petroleum products in the event of a crisis.

“In a report commissioned by the MUA, shipping expert John Francis found the exclusive reliance on foreign flagged tankers for crude and refined petroleum products removed any opportunity for the Commonwealth to requisition national flag tankers if needed to maintain fuel supplies during a crisis," Mr Crumlin said.

“His report, Australia’s Fuel Security – Running on Empty, concluded that the retention of a minimum number of Australian owned, managed and crewed tankers was not only justified on national security grounds, but could be achieved at a minimal cost to end users.”

Australia’s Fuel Security – Running on Empty report is available at:


Qld resource exports holding up despite COVID-19

INTERNATIONAL TRADE in Queensland’s resources has stayed consistent with an 80 percent contribution to the total value of the state’s exports of $82.1 billion in the 12 months to March 2020, according to the latest Australian Bureau of Statistics data.

Queensland Resources Council chief executive Ian Macfarlane said the latest ABS data was another solid result from the sector as the economic impacts of COVID-19 unfolded. 

“While it’s good to see the resources sector contributing more than three quarters or $65 billion to Queensland’s exports, the months ahead could be challenging as we see contractions in the world economy,” Mr Macfarlane said.

“China is Queensland’s largest market with $28 billion in exports over the last 12 months while coal remains our most important export commodity with $34 billion in international sales.

“While these numbers are encouraging especially for jobs here in Queensland, the industry will be closely monitoring any movement in demand from our international trading partners." 

Queensland Treasury data:


Stronger domestic cattle market to counter pandemic-affected trade says Rabobank

EXTREME opposing forces will dominate the Australian cattle market in 2020, with limited supply and strong local demand driving prices, but tempered by the global COVID-19 disruption, according to Rabobank’s Australian Beef Cattle Seasonal Outlook report.

The just-released report, titled The Battle of the Bulls versus Bears, outlined that despite the market being seriously tested by contracting global economic growth and COVID-19 containment measures, domestic forces would emerge victorious, keeping cattle prices high. 

Rabobank senior animal proteins analyst Angus Gidley-Baird said widespread rain had buoyed local restocking motivation among producers, reducing cattle sales and adding buying competition in an already supply-constrained market, with Australia’s cattle inventory reportedly at a 30-year low.

“We estimate the Australian cattle slaughter will fall 14 percent in 2020 to 7.29 million head, with a further decrease of two per cent in 2021,” Mr Gidley-Baird said.

Production was expected to drop to 2.1 million tonnes – among the lowest volumes seen in 15 years – with seasonally-driven increases in slaughter weights failing to offset reduced numbers.

While price-positive for graziers looking to sell livestock, Mr Gidley-Baird said low cattle availability would create challenges for producers, processors and feedlots, forced to manage their businesses with lower livestock numbers and high cattle prices.

Low slaughter numbers were also expected to contribute to a dramatic decline in Australian beef exports, forecast to drop 17 percent in 2020 to one million tonnes.

The significantly decreased cow slaughter – reducing Australia’s production of lean manufacturing beef – was also expected to result in a shift in volumes between export markets, Mr Gidley-Baird said.

“The US is a large market for lean manufacturing beef – 62 percent of exports to the US are manufacturing beef – and, all other things being equal, we expect exports to the US to drop in 2020,” he said. 


Forecasts suggest a dramatic contraction in global economic growth in 2020 resulting from COVID-19 that will be worse than experienced in the global financial crisis (GFC) of 2009, with large economic declines expected in key Australian beef markets such as the US, China and Japan.

As a high-priced protein, Mr Gidley-Baird said, beef would feel the impact of reduced consumer expenditure, with overall beef demand – particularly for premium products sold through full-service restaurants – expected to decline.

Heavily reliant on foodservice trade, Australia’s beef exports would also be hit by COVID-19-led social restrictions, particularly in China, where more beef was eaten out of home.

“This disruption to food service and slowing economic conditions is expected to place downward pressure on Australia’s beef export prices, creating a difficult price squeeze for those in the beef supply chain managing high cattle prices in a softer global market,” Mr Gidley-Baird said.

At the same time, Mr Gidley-Baird said, a weaker Australian dollar, China’s reduced pork availability due to African swine fever, and the US-China trade deal were all positive offsetting factors.


Despite countering global and domestic forces at play, the report forecasts the average annual Eastern Young Cattle Indicator (EYCI) to increase by 30 percent in 2020, to equal the annual average record set in 2016 at A$6.32 per kg.

Based on the last reported EYCI price of A$7.41/kg on March 19, this would mean prices were expected to ease but still remain strong over the remainder of the year.

However, given the forecast dramatic reduction in economic activity, uncertainty remained surrounding global beef price performance.


With climatic conditions taking a toll on northern cattle herds in past seasons, breeding inventory across Queensland and Northern Territory was estimated at a 20-year low in late 2019.

Mr Gidley-Baird said breeding numbers in some areas of southern Queensland were expected to be 75 percent below normal, yet, despite tough conditions, well-priced sales had generated solid returns, placing producers in a strong position to start the recovery.

As such, the report tipped Queensland would emerge as the 'colosseum' of the Australian cattle recovery.

“Producers, feedlotters, processors and live exporters are all vying for a very small pool of cattle, and prices in Queensland may see some of the strongest gains across all states given this fierce competition,’ Mr Gidley-Baird said.

Breeding cattle numbers were also significantly down in central and northern New South Wales, while higher breeder numbers and calf availability out of the south of the state remained closer to normal.

He said Victorian producers remained well-positioned to capitalise on national restocking demand and higher prices, with most areas – east Gippsland excluded – maintaining close to normal breeding numbers.

In South Australia, Mr Gidley-Baird said, producers could also look forward to a positive year, despite 2019’s dry conditions and reduced cattle inventory in the northern pastoral country.

“There may be slightly softer demand by local producers for replacement cattle, compared to NSW and Queensland, but these markets will still provide strong buyer interest for South Australian producers looking to sell cattle,” he said.

Dry conditions across much of Western Australia’s cattle-producing regions had driven increased slaughter rates, and would curb 2020 production, Mr Gidley-Baird said, however upward price pressure would come from east coast demand.

In Tasmania, current breeding cattle on-farm numbers were similar to early 2019, reflective of normal levels, yet increased competition from the mainland could see the movement of cattle out of the state.


Australian sugar well placed despite global disruption - Rabobank report

WHILE the OPEC oil fall out and coronavirus pandemic continue to impact global sugar markets, the Australian sector remains firm thanks to an increase in projected yields and strong export prospects, according to Rabobank's research.

However, Rabobank’s latest global Sugar Quarterly warns there will be new challenges to navigate amidst this new environment.

In its Q1 report, the agricultural banking specialist said widespread rain across key cane- growing regions – up to 800mm recorded in parts of north-east Australia – had strengthened yield prospects for the incoming 2020 crush, however warned the risk of cyclones and floods still loomed.

Rabobank commodity analyst Charles Clack said the robust yield trajectory also had the potential to mitigate a decreased growing area over recent years. 

“The domestic cane area fell by 11 percent from 2017 to 2019, with Rabobank forecasting a stabilisation in area in 2020,” Mr Clack said.

As such, assuming higher year-on-year (YOY) cane yields, the bank forecasts the 2020 Australian cane crop at 31 million tonnes, suggesting 4.2 million to 4.3 million tonnes in raw sugar production.

While comparative to the 4.2 million tonnes produced in 2019, Mr Clack said the figure still remained below the national five-year average.

He said the Australian industry could benefit from increased export opportunities, particularly in light of the severely-decreased 2019/20 Thai cane crop, down 40 per cent due to diminishing cane area and drought.

This, he said, was forecast to contribute to a 6.7 million tonne global supply deficit in 2019/20, before a return to a small surplus in 2020/21.

“Raw sugar output in Thailand is set to reach just 8.6 million tonnes, versus 15.4 million tonnes last years, allowing exports to reach just six to seven million tonnes and maintaining Thai premiums,” Mr Clack said.

“We expect demand for Australian sugar to improve in 2020 amid this cut in Thai supplies, particularly as Asian buyers such as Indonesia, who rely on Thai imports, look to origins further afield.”


Mr Clack said a drought-led fall in Indonesian 2019/20 production, coupled with a growing appetite, could also benefit both Australian and Indian exporters.

The significant depreciation of the Australian dollar – with the AUD/USD now standing at 0.59, down from 0.69 year to date – could also bolster export opportunities, Mr Clack said, and had so far, to an extent, insulated the local industry against the sharp fall in world sugar prices.

In February, Thailand’s low production drove ICE #11 Raw Sugar futures soaring above the 15USc/lb, yet Mr Clack said the coronavirus threat, followed by Russia abandoning its oil supply pact with OPEC and dragging down oil prices, in turn saw sugar prices fall below 11USc/lb.


Mr Clack said Brazil was one key sugar producer severely impacted by the Russian and Saudi Arabian oil fall out, and could potentially shift a significant volume of production from ethanol to sugar.

Low gasoline pump prices in response to oil’s slump, coupled with a decreased demand for local fuel due to COVID-19 had resulted in Brazil’s ex-mill ethanol prices falling sharply.

“The bottom line is that millers’ ethanol revenues and margins in 2020 look very vulnerable in the face of weeks, if not months, of reduced demand plus the threat of persistently-low oil prices, and a corresponding price decrease,” he said.

The global sugar price would continue to take its lead from the oil market in the coming weeks, and Mr Clack said any average ethanol prices reaching above a sugar equivalent of 11USc/lb would encourage a swing towards sugar production over ethanol.


Further impacts of the coronavirus crisis on consumption were difficult to predict at this stage, Mr Clack said, with Rabobank’s initial expectations indicating a large absence of global consumption growth in 2019/20 as industries including foodservice see diminished demand prospects.

“In the EU, for example, we foresee very little sugar consumption growth, due in part to the outbreak but more so the downtrend in sugar demand,” he said.

“Interestingly, the flattening demand in the EU, and globally, may be minimised by the assumption that people tend to eat more sugary and processed foods during hard economic times.”

In China – where low acreage and yields cut 2019/20 production by up to nine percent year-on-year – the negative impacts of COVID-19 on logistics and labour, leading to a delayed planting, could further decrease 2020/21 output.

Logistics bottlenecks, particularly delays in ports and borders were also expected side-effects globally, but with a prioritisation by governments on the food and agri sector, Mr Clack said food supply chain disruptions should be minimised.


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